By Jim Totty
Having just completed the 2017 tax season (congratulations!), now is a great time to evaluate your tax business and identify opportunities that will increase your profits.
The Pronto Tax School Team asked me to write this blog post and introduce you to a potential opportunity that you may be overlooking, which could be very profitable for you:
It’s called…Profit Enhancement Consulting.
Brief Note about My Experience
I worked as a profit enhancement consultant for numerous years. One of my most successful clients was a CPA firm that implemented a profit enhancement consulting service for their business clients. I helped this particular firm grow their profit enhancement division from zero to over $300K revenue within just a few years…by adding the service to their existing tax business.
We found during the process of helping this CPA firm add profit enhancement consulting that the firm’s business clients absolutely loved it when they saw their tax professionals going beyond mere “compliance” work into actually helping the business owner grow their profits.
If you have business tax clients, I can guarantee you that they would likewise appreciate any efforts on your part to help them develop a more profitable business.
Working “On” Versus “In” the Business
Most small business owners spend the vast majority of their time working in the business while leaving very little time to work on the business.
Understanding the difference between these two types of work is a major key for you if you want to add a profit enhancement consulting service to your tax business.
Working in the business centers around delivering the services or products that are the current core revenue provider for the organization. In order to increase profits, the business owner is faced with either 1) working longer hours to produce more, or 2) increasing overhead cost by adding staff.
The downside to the approach for the owner to work more hours is that the business owner’s quality of life often declines as hours worked increases. Family problems, for instance, become all too common.
Additional staff, meanwhile, will require the owner’s time for training, direction and oversight in order to maintain a high level of client service.
Working on your business, by contrast, focuses upon the opportunities for growing profits in both the short and long term.
Eliminating unprofitable products or services would be an example of working on your business. Finding a technology tool that helps you give better customer service, at lower cost, would be another good example of working on your business rather than in it. Developing a mentorship program within your company is yet another example.
What a Profit Consultant Does
Although the term may seem vague, the job is actually quite simple:
Your main function as a Profit Enhancement Consultant is to help your client work on the business rather than in the business.
You seek to find the “buttons to push” in the business that can help the business owner escape the proverbial “hamster wheel” and achieve profitable, sustainable growth.
How to Get Started with Profit Enhancement
By now you can probably see that if you could help your business clients achieve this goal of being more profitable, they probably would be interested to learn more.
But how do you get started?
First of all realize that your greatest asset is you current client base.
Believe me, many profit enhancement consultants would love to have a database of business owner clients who know your name and trust you–as a tax preparer, you already have this going for you, which is terrific!
These business owners already know you and (presumably) have trust in your ability to provide quality service.
You are in a great position to add value to their organizations by helping these business owners identify and solve the problems that are preventing them from being as profitable as they want to be.
It all starts with just reaching out to your client and asking some good questions:
- What are the problems and bottlenecks that prevent your business from being more profitable?
- What would make your company a better place to work?
- If you could make one change in the business instantly, what would it be?
- What problems consume your time and prevent you from being more effective in your leadership position?
- What keeps you up at night?
Most business owners will talk your ear off about these matters.
Listen and learn.
They will tell you what they need.
Don’t Stop at the Top
Continue these interviews throughout the organization. Always speak with multiple people at the company. Even at the smallest of small businesses, there are always other people involved, could be husband or wife of the owner, a vendor, an employee, etc.
By talking to multiple people, a pattern will start to appear, and a consensus can be developed for prioritizing the opportunities.
While it may not be feasible to interview all of the employees at a larger company, it is critical that all levels of the organization be represented.
Subject matter experts, the people actually doing the work, know where the problems exist because they live with the consequences on a daily basis. Consequences typically include having to rework items that have already been completed, working in a crisis environment where every task is an emergency, and not understanding the company’s mission.
Develop a Proposal
After you’re done with your “fact-finding mission,” prepare a summary for the business owner, showing the estimated cost savings and benefits that could be derived by solving the issues that the owner and his employees have identified.
Providing this assessment is of great value to your client and your fees can and should reflect your role in creating that value. A recommendation in terms of pricing for this type of service would be to set a fee up front for the assessment and presentation of your findings.
Then the next phase will be working with the client to develop solutions and implementation, addressing one problem at a time.
If you’re speaking with a business owner who’s serious about growing profits, you will find that he or she is often prepared to make a significant investment in this type of service.
Be careful, when you’re just starting out, to make sure you can actually solve the problems you’re proposing to solve–avoid the danger of “overpromise, underdeliver.”
Helping your business clients increase their profits is a wonderful way to develop loyalty, spur referrals, and increase your own profits. Business owners are continually looking for trusted advisors to help them be more productive and more profitable. Tax professionals are uniquely positioned to assist with the profit enhancement process and reap the rewards thereof.